1990(02)LCX0080

BEFORE THE CEGAT, SPECIAL BENCH ‘C’, NEW DELHI

S/Shri G. Sankaran, Senior Vice President, K.S. Venkataramani, Member (T) and S.L. Peeran, Member (J)

COLLECTOR OF CUS.

Versus

BENGAL CHEMICALS & PHARMACEUTICALS LTD.

Order No. 117/90-C, dated 15-2-1990 in Appeal No. C/3627/87-C

Advocated By : Shri S. Chakraborty, SDR, for the Appellant.

Shri K.K. Banerjee, Advocate, for the Respondents.

[Order per: G. Sankaran, Senior Vice-President], - This is a departmental appeal against the Order-in-Appeal No. Cal-Cus-740/87, dated 8-4-87 passed by the Collector of Customs (Appeals) Calcutta.

2. M/s. Bengal Chemicals and Pharmaceuticals Ltd., the respondents herein, imported a consignment of “Storax Prepared BP 1883" at the Port of Calcutta. As per the said description on the covering Bill of Entry, the substance was considered to fall under the category of Resinoid and was classified, and assessed to duty under Heading No. 3301.30 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as the ‘Customs Tariff). A sample of the substance was tested by the Assistant Drugs Controller and found to be ”Storax Prepared" conforming to B.P. Thereafter, the respondents filed a claim for refund of duty on the ground that the assessment should have been under Heading No. 1301.90 of the Customs Tariff because prepared storax, according to them, was^ purified balsam. The claim was rejected by the Assistant Collector on the ground that though storax, solid or liquid, was Classifiable under Heading No. 1301.90, the substance in the instant case was prepared storax, a resinoid extracted from storax. This order was challenged in appeal by the respondents. In his order dated 8-4-87, the Collector (Appeals) noted that prepared storax was a purified balsam used in the manufacture of the pharmacopoeial drug “Compound Benzoin Tincture I.P.” and not a resinoid, that storax resinoid could not be used in any drug formulation and was not marketed as a pharmacopoeial item and was used solely by the perfumery industry. Accordingly, he allowed the respondents’ claim. The Collector of Customs has filed the present appeal against this order.

3. The only ground put forth in the appeal is that the Drugs Control Laboratory’s test report and the declaration in the Bill of Entry confirmed that the substance was purified form of Storax Prepared. Though in crude form obtained from the plant, it would merit classification under Heading No 13.02 of the Customs Tariff, in purified form, it was used as resinoid. In support, a technical note furnished by the Chief Chemist of the Custom House has been furnished. The prayer is that the Collector (Appeals)’s order should be set aside and the original classification should be restored.

4. We have heard Shri S. Chakraborty, DR, for the appellant-Collector and Shri K.K. Banerjee, Advocate, for the respondents.

5. The learned D.R’s contention is that Storax is a natural balsamic resin whereas the substance under consideration is not the pure natural resin but a preparation containing the resin. Resinoid, according to the explanatory notes in the Harmonised System of Nomenclature (HSN), is composed essentially of non-volatile material obtained from vegetable resin. As a prepared resin, the imported substance falls under heading No. 3301.30. Only crude balsam falls under Chapter 13.

6. In reply, the learned Counsel for the respondents submits that the imported substance is purified balsam used for manufacturing Compound Benzoin Tincture I.P. For this, he relies on extracts from “The Dispensatory of the United States of America - 25th Edition page 1315”. He further submits with reference to the HSN explanatory notes under Heading No. 13.01 that the heading covers storax, solid or liquid, crude, purified etc. It was excluded from the heading only if it was subjected to any processing washed. He also refers to the work “The Encyclopaedia of Chemical Science and Technology” - Kirk Othmer - III Edition, Vol. 16, page 949 and submits that prepared storax is obtained by alcohol extraction whereas resinoid is obtained by use of hydrocarbon solvent. Resinoid is used in perfumery while prepared storax is used in medicines. In the circumstances, Chapter 13 of the Customs Tariff is more specific for the substance.

7. In a brief rejoinder, the D.R. points out that according to the U.S. Dispensatory, the balsamic acid content should be 30% whereas, according to the Drugs Laboratory’s test, it is only 28.87%. (To this, Shri Banerjee would submit that, according to B.P. 80, the acid content need be 28.5% only).

8. We have carefully considered the rival submissions and perused the record. The Central Drugs Laboratory, Calcutta’s test report dated 12-9-80 (copy filed by the Collector) shows that the substance was tested by the B.P.’ 80 method. The sample was described as a brown viscous liquid, transparent in thin layer, having a balsamic odour. It was found to comply with B.P. The total balsamic acid was found to be 28.87% as against the minimum of 28.5% in B.P.’ 80. The Deputy Chief Chemist’s note evidently came into existence after the date of the impugned order and no steps have been taken by the Revenue for seeking leave of the Tribunal for placing on record this additional document. It was perhaps for this reason that the learned D.R. did not refer to it in the course of his arguments. The “Dispensatory of the U.S.A.” states :-

“Storax is a balsam obtained from the trunk of Liquidambar orientalis Miller, known in commerce as Levant Storax, or of Liquidambar styracifua Linne, known in commerce as American Storax (Fam. Hamamelidacea). USP.”

Under the title Prepared Storax the B.P. recognizes only the balsam from the wounded trunk of the L. Orientalis, purified by extraction with alcohol, and containing not less than 30.0 per cent of total balsamic acids, calculated on the basis of the substance dried on a water bath for one hour."

However, the British Pharmacopoeia, 1980, says :-

“Prepared storax is the purified balsam obtained from the trunk of Liquidambar Orientalis Miller. It contains not less than 28.5% of total balsamic acids.”

It may thus be seen that the B.P. prescribes a minimum balsamic acid content of 28.5%, not 30%. And, the Central Drugs Laboratory test report shows a balsamic acid content of 28.87%. The acid value was found to be 56.12, that is, within the limit of 52 to 76 laid down in B.P.’ 80. Same is the case with saponification value which was found to be 161.78, that is, within the limit of 160 to 190 laid down in B.P.’ 80. The report says it has been identified as, and conforming to, storax, prepared, B.P.’ 80. According to the B.P. 1980, prepared storax is purified balsam. Now, balsams are specified in Heading 13.01 -

“Lac; natural gums, resins and balsams.

There is no statutory chapter note having the effect of excluding prepared storax (purified balsam) from Heading 13.01. Chapter Note 1 (h) excludes resinoids. It is for the Revenue to show that the imported substance is a resinoid. The explanatory notes of the HSN relied upon by the Revenue have no statutory force. Even so, they are a useful reference material. Under Heading No. 13.01, the notes say inter alia that the natural gums, resins, oleoresins and balsams covered by the heading may be crude, washed, purified, bleached, crushed or powdered. They exclude only processed material - such as treatment with water under pressure, treatment with mineral acids or heat-treatment. There is no evidence to show that the instant goods had been subjected to any of these or similar processes. Prepared storax, being purified balsam, is, therefore, more appropriately covered by the Heading 13.01, sub-heading 1301.90, rather than a resinoid under Heading 33.01, sub-heading 3301.30.

9. In the above view of the matter, the appeal fails and is dismissed.

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Equivalent 1990 (47) ELT 374 (Tribunal)